Reprinted with permission from
The Germany Law Firm

The increased amount of wealth held by older investors who now make up one third of all U.S. investors, has led to senior citizens increasingly become targets of financial abuse and fraud. Approximately 5 million senior citizens become victims of deceptive investment sales, financial abuse and fraud a year. Perpetrators of financial abuse and fraud employ various types of schemes or misuse senior designations to defraud seniors who generally cannot rebuild their retirement funds. While perpetrators of financial abuse are usually family and caretakers (statistics indicated 85% of elder abuse is perpetrated by family members), perpetrators of abusive insurance and investment sales are typically strangers who use unsolicited phone calls, high pressure sales seminars, or websites to pitch fraudulent investments.

In order to determine whether you, a client, or a family member has fallen victim to a deceptive investment sale it is important to take into account a few things. Some of the common red flags of fraud about which seniors should be advised are the yields of the return, whether the return is purported to be “guaranteed,” or pressure to send money immediately. If the promised yields of return are substantially higher than current returns on accredited stock indexes, the investment is likely very risky. Furthermore, claims that returns are “guaranteed” or that the investor must invest quickly are generally tactics fraudsters use to dissuade older investors from examining the investment they are pushing.

Another subject that is very important for seniors and their families to take into account is the aggressive advertising of private Medicare advantage plans. A study by the Colorado Department of Health and Human Services found that private Medicare advantage plan sponsors using independent sales agents had compensation practices that incentivized aggressive advertising and the enrollment of Medicare beneficiaries in Medicare Advantage Plans that did not best meet the beneficiaries’ health care needs. Furthermore, they found that many agents were unqualified and unlicensed when they took Medicare beneficiaries enrollment applications. They also found that the majority of complaints concerning aggressive sales tactics involved sales agents inappropriately and inaccurately discussing the Medicare beneficiaries’ current plans or contacting them at their residence, often times claiming to be from Medicare. Some red flags that will allow you to determine a Private Medicare Advantage Plan Agent is unqualified and unlicensed include:

  • Agent claiming to be from Medicare
  • Agent will have Medicare recipient fill out “request for more information” when actually the request form is an enrollment for the plan the agent is selling
  • Agent tells Medicare recipient that the plan is free
  • Sales agent is contacting the Medicare recipient at their home (if so, they have violated Medicare’s rules.)
  • The multiplicity and varying degrees of requirements of senior designations is likely to confuse senior investors, especially when titles that appear to have a standardized criteria or are similar to those that do have very limited or no required training, qualifications or ethical standards. For example, an “Accredited Estate Planner” must be an attorney, accountant or insurance professional, must not be subject to disciplinary action, and must have a minimum of five years’ experience, while the similarly-sounding title, “Accredited Retirement Adviser” only requires an examination that is not evaluated against a third party accreditation standard. Furthermore, some senior designations lack online methods to check any designee’s status, submit complaints, or disclosures of disciplinary procedures for misconduct.
  • Being able to recognize common perpetrators of elder fraud and financial exploitation along with being able to look for and report suspected abuse will help combat these growing issues.
  • Seniors should also be aware of professionals using senior designations. Older investors are more likely to rely on the recommendations of a professional using a senior designation – however, among the 50 different senior designations currently used by financial advisors, the required training, examinations, oversight and ethical standards associated with those designations vary greatly. Advisers that use titles with no regulatory qualifications or registration, often employing “free-lunch seminars” that specifically target seniors may be engaging in potentially fraudulent practices. According to an SEC report, the combination of advertisement and the misuse of senior designations left seniors, some of which exhibiting signs of diminished capacity, vulnerable to high-pressure marketing tactics.